Boosting growth and internationalisation

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Finland’s national economy faced yet another challenging year in 2014, and towards year’s end the country’s business community was impacted by the Russian crisis. Investments by small and medium-sized industrial companies decreased, posing challenges for Finnish industry’s rejuvenation capabilities. The weak economic situation was reflected in the private equity and venture capital market, and write-downs in the exit statistics of portfolio companies reached the highest amount in four years.

There were also positive developments. Finnish private equity and venture capital funds raised almost €600m of new capital during the year, the highest figure since the financial crisis. Some 20% more private equity and venture capital investments were made in 2014 compared to the previous year. The private equity and venture capital industry plays an essential role in building companies’ growth, as proven by the faster growth in turnover of companies receiving such investment compared to their peer companies.

Finnish Industry Investment made new investments in 2014 amounting to €83m. New investment commitments, totalling €42m, were made to seven venture capital and private equity funds and €40m was paid out in new direct investments. Positive developments included the acquisition of Turku shipyard together with Meyer, a family-owned German company, and the record volume of venture capital that Finnish Industry Investment channelled through its investment network into Finnish businesses. In June 2014, the €100m Industrial Renewal investment programme was launched successfully. The result for the year was nevertheless unsatisfactory. Value reductions of investments as well as the exit and sales losses for exits entered in the accounts pushed the result for the financial year into a loss of €43.2m. The largest individual loss, €14.8m, was caused by Finnprotein Oy’s bankruptcy.

Financial year 2015 has started promisingly. Finnish Industry Investment made a number of exits from its investment portfolio and has sustained a good cash flow in the first quarter of 2015. In line with its updated strategy, Finnish Industry Investment will in future focus its direct investment operations more clearly on companies needing later-stage venture capital financing and on medium-sized Finnish enterprises seeking international growth. We will continue to focus our fund investment operations on financing Finnish private equity and venture capital investment funds and on working towards internationalising Finland’s private equity and venture capital industry. Investments will be allocated more selectively, while the average size of individual investments will also be increased. We will be a pro-active owner, through both our own organisation and our investment network, in supporting the successful growth and internationalisation of portfolio companies.

The Annual General Meeting held on 17 April 2015 decided to increase Finnish Industry Investment’s share capital by €105m. The share issue relates to three investment programmes: recapitalisation of the FoF Growth II fund; the Industrial Renewal investment programme, and a new investment programme for attracting international private equity and venture capital investments.

Finnish Industry Investment will continue to play a central role in promoting the internationalisation of Finland’s SMEs as well as in developing and internationalising Finland’s venture capital and private equity market.